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Poker Player Funds Still Frozen

Monies that were seized by federal orders on their way through e-cash companies and banks to pay US online poker players will not be released, a US District Judge in San Diego ruled as the week came to a close.

The funds, which are understood to amount to some $13 million in the San Diego issue, are believed to have been destined for mainly Full Tilt Poker and PokerStars players, and were the subject of an appeal against federal warrants seizing the cash by San Diego-based Account Services Inc., an e-cash company allegedly owned by Canadian national Douglas Rennick. Rennick is not in custody, although US federal officials indicted him on bank fraud and money laundering charges, as well as conspiracy to operate an illegal gambling business.

The government also seeks $565 million in forfeited money it claims are the proceeds of illegal acts involving online gambling transactions.

The Rennick indictment enabled federal officials to sidetrack the San Diego action as 'irrelevant' pending the outcome of the criminal trial, possibly adding years to any recovery.

The San Diego Union Tribune reports that the case raises questions around the legality of online poker in the US, but that U.S. District Judge Jeffrey Miller denied a bid by lawyers for Account Services Inc., and the Poker Players Alliance to return the money, focusing on a specific legal issue of the court's authority rather than debating the legality of online poker.

Michael Pancer, a lawyer representing Account Services, submitted in court papers that company officials believe the funds were seized under the federal Illegal Gambling Act. The company - later joined by the one million strong players association - argued that poker is not covered under that law and therefore the seizure was illegal. Pancer also contended that prosecutors in the case have used questionable tactics to hold on to the money, and have avoided arguing the legality question.

Now, following Judge Miller's ruling that the seizure must stand, it could be years before company or players see any of the money.

Court papers filed by Pancer's law firm on behalf of Account Services say the company makes payments to players who are cashing out or withdrawing from a game when instructed to do so by the designated operator. The company makes thousands of payments each month, according to court papers.

The controversy began in June, when prosecutors in the U.S. Attorney's Office in Manhattan seized funds in bank accounts for Account Services at Wells Fargo and Union Bank. The precise justification for the seizures remain sealed in an affidavit applying for the warrants.

The federal gambling act requires that a state law against gambling has to be violated in order for a federal prosecution to be brought, said Marc Zwillinger, a lawyer for the players. Most states, including California, distinguish between games that predominantly rely on luck and those that rely on skill in defining whether gambling is taking place.

The players argued that poker is a game of skill, and therefore no laws were broken and the seizure was illegal.

Armed with those arguments, the company filed a suit in the San Diego District Court, where the banks holding the accounts are located.

Before the issue could be heard, prosecutors in New York indicted Rennick. They then argued the indictment made the San Diego lawsuit irrelevant and that Miller should not hear it. The judge agreed, saying the players could try to recover the money after the criminal case is resolved.

Lawyers for the players, however, contend that could be years. Rennick is a Canadian and is not yet under arrest and there is no telling when his case will be heard. The lawyers cry foul.

“It seems the government switched gears and they seem to have done it to specifically avoid the question of whether online gambling violates federal law,” Zwillinger said.

A spokeswoman for the U.S. Attorney's Office in Manhattan declined to comment on the case, or say if the office is seeking Rennick's extradition.

Pancer said Account Services is considering “other avenues” to try to get the money, but declined to be more specific.

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